Trustees are going back to the drawing board in Sunrise Beach to try to work out a different rate increase for the village's water system.

Amy Wilson Lake Media Reporter

Trustees are going back to the drawing board in Sunrise Beach to try to work out a different rate increase for the village's water system.

A handful of business people spoke up at a hearing Monday evening on draft user fee increases that would have the biggest impact on commercial customers. To say the least, they were "not happy", as Portside Vacation Properties owner Ken Stumpf put it, with the proposal that would force businesses in Sunrise Beach — mainly small operations — to shoulder the majority of cost increases when many of the owners cannot vote on town issues due to lack of residency.

The village's loan from the U.S. Department of Agriculture Rural Development for phase one and two of the water system went from interest-only payments to payments of interest and principal on March 1. According to trustees, monthly payments have gone from $6,023 a month to $10,823 — an increase of $57,492 per year. The new rates are anticipated to grow revenue by approximately $49,000. The rest would be covered by about $10,000 from the city's 1/2-cent capital improvement sale tax fund.

It is the increase in debt payments that have necessitated a rate increase, the board says.

With the water system and coming sewer system put in place mainly to benefit existing businesses and economic development — rather than residents, a majority of whom on the Highway 5 corridor meet low to moderate income levels and/or are on a fixed income — the brunt of financing has typically been placed on the commercial side.

However there are 155 residential meters on the system and only 41 commercial meters, according to the city.

While the current monthly "base" rate for both residential and commercial users is $39, residential users receive 5,000 gallons of water for that charge and commercial users 1,000 gallons.

The draft rate increases recently proposed by the city would have raised the residential base rate to $44 a month and the commercial base rate to $59. So for residents, the increase in the base would be a nearly 13 percent raise, while businesses would see a jump of more than 51 percent in the base.

With residential customers rarely ever going over 5,000 gallons, the rate for additional water usage over the base was proposed to be left the same at $8.23 per gallon.

The additional charge over the base for commercial customers was proposed to rise from $8.23 per gallon to $14.50 — a more than 76 percent increase.

With only 1,000 gallons of water usage in the commercial base figure, businesses are more likely to go over the base rate though it varies depending on the type of business.

Restaurants are some of the more intensive users on the system, but have also traditionally made up the core income for the village over the years through sales tax.

The board heard concerns from Ron Duggan who owns two restaurants that are on city water. With this type of business typically running at a profit margin of 5-7 percent, rate increases of 50 and 70 percent would be tough to swallow, said Duggan.

"There's only so much you can pass until it's not palatable for the consumer," he commented.

He asked the board to consider a smaller rate increase if possible.

Prospective city merchant Dan Laubach — who has an active annexation petition with the board for Franky & Louie's Beachfront Bar & Grill, Deer Valley Campground and RV Park and a proposed new entertainment venue — also shared concerns about the spike in user fees for businesses.

Trustee Chairman Curt Mooney promised the business owners that the board would go back and refigure the proposal with their issues in mind.

"We'll keep you posted. Nothing is concrete. Hopefully we can come up with something better, but I don't know what we'll present to USDA at this point," Mooney said.

A few residents on hand at the hearing also asked the board not to forget the impact of rate increases on residents with low and fixed incomes.

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